Nomura grabs Lehman Asia unit; Europe next

TOKYO/LONDON (Reuters) - Japan's Nomura Holdings <8604.T> is to buy the Asian operations of Lehman Brothers after outbidding rivals on Monday and also emerged as the front-runner to buy the bankrupt bank's businesses in Europe.

Nomura said it would buy Lehman's franchise in Asia Pacific, including Japan and Australia and 3,000 staff. It will pay up to $525 million for the business, according to a person familiar with the matter.

Nomura is also in talks to buy Lehman's business in Europe, three sources said. The administrators in Europe, PricewaterhouseCoopers, said they were in talks with one party regarding the investment banking and equities business, and a source familiar with the matter confirmed it was Nomura.

Lehman has about 6,000 staff in Europe.

Administrators and senior Lehman staff are working to save as many jobs and as much business as possible from the wreckage of what was Wall Street's fourth-biggest investment bank.

PcW said its discussions with one potential bidder in Europe "should result in a better deal for staff and creditors."

British bank Barclays , which last week bought Lehman's core U.S. business, was interested in the European equities business but not all of the business, a person familiar with the matter said.

Lehman last week filed for bankruptcy protection after collapsing from its exposure to risky subprime mortgage securities. Barclays struck a $1.75 billion deal to rescue the U.S. investment banking business, and signaled it might do the same for other units.

A deal for Lehman's investment management unit, which includes the crown jewel, Neuberger Berman, is still being hammered out. Private equity firms Bain Capital and Hellman & Friedman have teamed up to bid for the assets, sources said. It was unclear whether other buyout firms such as Clayton, Dubilier & Rice and KKR, who were originally pursuing the unit, were still interested.

"TRANSFORMATIONAL DEAL"

Nomura's President and CEO Kenichi Watanabe said the purchase in Asia marked "a transformational deal" that would harness Lehman's strong position in areas such as M&A advisory.

"Our ability to capitalize on this opportunity in spite of such volatile markets reflects our financial strength and demonstrates how well we have managed the credit crisis," Watanabe said.

Nomura was the first Japanese securities company to establish an overseas office 81 years ago. It has 18,000 staff in 30 countries and its Asia deal and interest in Europe would meet its aim to expand its investment banking business globally.

"Nomura's global hub for this business is London, rather than New York, so bidding for Lehman's European operation makes sense," said Wataru Kasatani, senior financial analyst at Meiji Dresdner Asset Management. "Lehman's Asia operation will also add value to what Nomura has been doing in Asia."

Nomura is Japan's top underwriter for stock offerings and also tops the M&A advisory table. But it ranks outside the top 20 in both Asia and European M&A advisory work, while Lehman ranks second in Asia ex-Japan and seventh in Europe.

Standard Chartered and Barclays had also been interested in Lehman's Asian assets, sources with direct knowledge of the matter said. Samsung Securities officials also looked at the Asian operations, a source close to the matter said separately.

Lehman's net revenue from Asia-Pacific in January-June was $1.4 billion, nearly matching the whole of 2006 and accounting for roughly 20 percent of the bank's overall revenues.

The Tokyo office has a large fixed income group, while Hong Kong mainly houses M&A, equity capital and debt capital bankers.

Shares in Nomura, regarded as a domestic powerhouse, rose 8 percent in Tokyo on Monday.

Investment bank Rothschild advised on the sale of the Asian operations, a person with direct knowledge of the process said. KPMG was also involved in the talks after being appointed as provisional liquidator to Lehman's Hong Kong operations.

On Sunday, more than 100 angry Hong Kong investors, many of them elderly retirees, marched on government offices, calling for action after losing money on structured products linked to Lehman. They accused the government and local banks of failing to warn them of the risks involved.

British Prime Minister Gordon Brown said on Saturday he was pushing the United States to help get $8 billion from Lehman to its staff in Britain. PcW have questioned why that amount was transferred to New York just before the bank collapsed.

(Additional reporting by Emi Emoto, David Dolan and Taro Fuse in TOKYO, Michael Flaherty and Jeffrey Hodgson in HONG KONG, Angela Moon in SEOUL and Steve Slater in LONDON, Megan Davies in NEW YORK, Writing by Ian Geoghegan; Editing by Jean Yoon, Paul Bolding and Hans Peters)